Citation NR: 9635955
Decision Date: 12/17/96 Archive Date: 12/24/96
DOCKET NO. 94-02 157 ) DATE
)
)
On appeal from the
Department of Veterans Affairs Regional Office in Boise,
Idaho
THE ISSUE
Entitlement to waiver of recovery of an overpayment of
improved pension benefits in the amount of $4,902.
REPRESENTATION
Appellant represented by: Veterans of Foreign Wars of
the United States
ATTORNEY FOR THE BOARD
Amanda Blackmon, Associate Counsel
INTRODUCTION
The appellant served on active duty from September 1952 to
September 1954.
This matter comes before the Board of Veterans’ Appeals
(Board) on appeal from a June 1991 decision by the Committee
on Waivers and Compromises (Committee) of the Department of
Veterans Affairs (VA) Regional Office (RO), located in Boise,
Idaho. In its decision, the Committee determined that the
appellant was not entitled to waiver of recovery of an
overpayment of improved pension benefits, in that such action
would not be against the standard of equity and good
conscience.
CONTENTIONS OF APPELLANT ON APPEAL
The appellant essentially contends that he is entitled to a
waiver of the recovery of the overpayment because he informed
the VA of his sources of income in his financial disclosure
reports. He maintains he was not trying to deceive the VA.
He further indicates that an attempt to recover the
overpayment would create financial hardship upon him.
DECISION OF THE BOARD
The Board, in accordance with the provisions of 38 U.S.C.A.
§ 7104 (West 1991 & Supp. 1995), has reviewed and considered
all of the evidence and material of record in the appellant’s
claims file. Based on its review of the relevant evidence in
this matter, and for the following reasons and bases, it is
the decision of the Board that the weight of the evidence is
against the claim for waiver of recovery of the overpayment
of improved pension benefits, in the calculated amount of
$4,902.
FINDINGS OF FACT
1. All available, relevant evidence necessary for an
equitable disposition of the appellant’s claim has been
obtained by the RO.
2. Effective April 1989, the appellant was paid improved
pension benefits based upon a report of no countable income
and no net worth; he was then and thereafter advised of the
necessity for reporting income from all sources and any
changes in income or net worth promptly.
3. The appellant was overpaid improved pension benefits in
the calculated amount of $4,902, as a result of delayed
financial disclosures made by the appellant; the appellant’s
income and net worth were a bar to the payment of improved
pension benefits.
4. The overpayment was created by the appellant’s failure to
promptly and correctly report his income and net worth,
despite having been advised to immediately report changes in
income and net worth to VA.
5. The appellant was at fault in the creation of the
overpayment, and recovery of the overpayment would not cause
undue hardship.
6. Recovery of the overpayment would not defeat the purpose
of improved pension benefits, and failure to recover the
overpayment would result in unjust enrichment of the
appellant.
CONCLUSION OF LAW
Recovery of the overpayment of improved pension benefits, in
the amount of $4,902, would not be against equity and good
conscience. 38 U.S.C.A. §§ 5107, 5302 (West 1991); 38 C.F.R.
§§ 1.963, 1.965(a), 3.274, 3.275 (1995).
REASONS AND BASES FOR FINDINGS AND CONCLUSION
The Board notes that the appellant’s claim is well grounded
within the meaning of 38 U.S.C.A. § 5107(a) in that his claim
is plausible, that is meritorious on its own or capable of
substantiation. Murphy v. Derwinski, 1 Vet.App. 78 (1990).
Once it has been determined that a claim is well grounded, as
here, VA has a statutory duty to assist the appellant in the
development of the evidence pertinent to that claim.
38 U.S.C.A. § 5107.
In this regard, this issue was initially before the Board in
September 1992. The issue then before the Board was whether
the creation of the debt was proper. The Board determined
that the creation of the debt, relative to January and
February 1990, were proper. It was further the determination
of the Board that the overpayment relative to April 1990 was
not properly created. The overpayment was recalulated in
accordance with the Board’s decision and determined to be
$4,902. The case was next before the Board in January 1996
for a determination of entitlement to waiver of the
overpayment. The Board remanded this matter for further
evidentiary development. Specifically, there were
indications, based upon the appellant’s assertions and
financial statements of record, that additional information
relevant to the issue on appeal had not been submitted for
consideration. The requested development has been
accomplished and the case has now been returned to the Board
for further appellate consideration. The Board is satisfied
that all relevant and available evidence is of record and the
statutory duty to assist the appellant in the development of
evidence pertinent to his claim has been met.
Factual Background
In his application for pension benefits, received in May
1989, the appellant reported that he last worked in April
1989. The appellant reported no countable income from
earnings and no net worth, to include stocks, bonds, and bank
accounts. He likewise reported that he did not have earnings
associated with real estate, and other property. He reported
no debts. The appellant indicated that neither he nor his
spouse received or had applied for Social Security benefits.
Total earnings of $1,000 were reported as received by the
appellant, from the beginning of the calendar year until the
date of his pension application. Of this amount, the
appellant indicated he received gross earnings of $246 from
“final payment in April 1989.” In the space allotted to
report his spouse’s income, the appellant indicated “none.”
In a September 1989 rating decision, the RO granted the
appellant’s claim for entitlement to nonservice connected
pension benefits, effective April 1989. In a September 1989
notification letter, the appellant was advised of the rating
determination. In addition, the appellant was advised that
the award of pension benefits was based upon his “countable
annual income of $0 from April 28, 1989.” In that context,
it was further noted that the appellant had previously
reported no income from any source, to include earnings,
Social Security (SSI) benefits, retirement, interest income,
insurance benefits, or any other source. It was noted that
he also reported no net worth. The appellant was advised of
the need to notify VA concerning any change in his family
income, and that the failure to do so may result in an
overpayment of benefits.
In a May 1990 Improved Pension Eligibility Verification
Report (EVR), VA Form 21-0516, the appellant reported his
income for the period May 1989 to April 1990. For this
period, the appellant reported monthly income consisting of
$576 derived from SSI benefits, and $128 in retirement
benefits. He reported that his wife earned no income. The
appellant reported cash holdings of $6,000. In the
appropriate space, the appellant checked the “no” box,
denoting that his income had not changed during the past 12
month period. There were no unreimbursed medical expenses
noted for this period. The appellant did not provide any
information concerning income amounts that he expected to
receive the following year.
By letter, dated in June 1990, the RO requested the appellant
to provide additional information concerning his reported
income. Specifically, the appellant was requested to provide
a copy of the letter of award for his SSI benefits, and
information concerning the reported $128 in retirement
benefits.
In a June 1990 statement, the appellant indicated that the
reported $128 represented a monthly retirement payment; he
reported that of that amount, $92.74 “is held out for
insurance.” He also indicated that the reported $6,000 in
assets represented “retroactive payments received from
Social Security.” The appellant submitted an account
statement documenting the payment history for his retirement
benefits. A copy of the SSI award letter was received, and
indicated that the appellant was determined to be eligible
for SSI benefits, effective August 1988.
In August 1990, the appellant was advised of adjustments to
his pension award based upon his reported annual income. In
that regard, the pension was reduced, effective January 1990
based upon receipt of SSI benefits, with further reduction in
February 1990 based upon receipt of retirement benefits, with
the pension benefits terminated in April 1990 due to receipt
of retroactive SSI benefits.
The appellant was advised by letter, dated in September 1990,
that his medical expenses did not exceed five percent of his
maximum annual pension rate and, therefore, could not be
deducted from his income for pension benefits purposes.
In a November 1990 Financial Status Report, VA Form 4-5655,
the appellant reported monthly income of $673 (SSI and
retirement benefits), for the past two year period. The
appellant reported that his wife earned no income during this
period. Monthly expenses were reported in the amount of
$642, with a remaining monthly balance of $31. The appellant
reported assets consisting of cash holdings valued at $300.
Furniture and household goods were valued at $1,000. The
appellant noted a 1985 Dodge automobile, but did not indicate
its resale value. He also reported a camper valued at $200.
The appellant reported outstanding credit charges of $5,084,
with monthly payments of $200 toward this debt.
In August 1990, the appellant requested a waiver of the
overpayment. This matter was referred to the Committee in
February 1991. A memorandum relating to the indebtedness
noted an overpayment calculated in the amount of $4,936.
In a June 1991 decision, the Committee denied the waiver
request. This determination was predicated upon the
Committee’s finding that the appellant did not report an
increase in his income until May 1990. It was noted that the
appellant was at fault in the creation of the debt due to his
failure to timely report changes in his income. It was
further the Committee’s determination that collection of the
debt would not create an undue financial hardship or defeat
the purpose of the benefit, and such repayment would not be
against equity and good conscience.
In correspondence, dated in February 1990, the appellant
indicated that he was unaware of the requirement to report
changes in his income. He indicated that during the period
between receipt of his pension benefits and SSI benefits, he
was ill. He noted that his claim for SSI benefits had been
made three months following his application for VA pension
benefits. He further indicated that he did not know that SSI
benefits would be paid on a retroactive basis, and stated
that the majority of the retroactive funds were reportedly
used for expenses incurred. The appellant indicated that
“all of this information was made apparent to the Veterans
Administration in the filing of [his] first Eligibility
Verification Report.” It was his contention that his “only
offense was [his] lack of knowledge that [he] was to make
immediate notification of change of income instead of waiting
for [his] yearly report.” In support of his contentions, the
appellant provided copies of letters concerning adjustments
to his SSI benefits, due to implementation of a cost of
living increase and a retroactive payment of withheld
benefits.
In a September 1992 decision, the Board determined that the
overpayment, representing receipt of additional income in
December 1989 and January 1990, was properly created. With
respect to overpayment for the month of April 1990, when the
appellant received retroactive SSI withholdings, it was the
Board’s finding that this overpayment had not been properly
created. In accordance with this decision, the appellant’s
pension was adjusted for purposes of awarding the pension
benefit payment applicable to April 1990, with benefits
thereafter terminated effective April 1990. The April 1990
award payment was applied to the current overpayment.
In an EVR, dated in January 1993, the appellant reported no
earnings for the period May 1990 to April 1991, with monthly
earnings from May 1991 to April 1992 reported as $1,020 ($607
in SSI and $128 in retirement benefits). His wife was
reported not to have earned income during either period. The
appellant reported no net worth. Unreimbursed medical
expenses totaling $1,543 were reported.
In an EVR, also dated in January 1993, the appellant reported
monthly earnings from May 1991 to April 1992 of $1,020 ($607
in SSI and $128 in retirement), and $3,700 in earnings for
the period from May 1992 to April 1993. His wife was
reported not to have earned income during either period. The
appellant also indicated that he had worked during the past
12 months. The appellant’s reported net worth consisted of
cash holdings valued at $110. The appellant indicated in the
appropriate space that his income had changed during the past
12 month period, due to wages received in October 1991.
Unreimbursed medical expenses totaling $1,566 were also
reported.
A financial status report, dated in May 1993, reported that
the appellant had been employed from May to October 1992, and
from May to October 1993. The appellant’s spouse was also
reported to have been employed from January to May 1993.
Monthly income was reported as $1,278. Monthly expenses were
reported in the amount of $1,085. The appellant reported
assets consisting of cash holdings valued at $30, furniture
and household goods valued at $500, and two automobiles with
a combined value of $6,500. The appellant reported
outstanding credit charges totaling $5,383.40, and monthly
payments of $325 toward this debt. It was noted that one
account was past due, in the amount of $60.40. The appellant
indicated that “income earned in the summer months must be
saved for winter period,” when income is less.
In May 1993, this matter was referred back to the Committee
for its consideration of the appellant’s request for waiver.
Of record is a memorandum, dated in May 1993, concerning the
appellant’s insurance premiums. It was noted that these
insurance premiums include both life and medical insurance
for the appellant and his wife. Premiums paid during 1990
totaled $92.74, with additional payments reported as: $92.50
in 1991, $100.58 in 1992, and $110.79 in 1993. Also
received was a copy of a report of SSI benefits, reflecting
effective dates for adjustment in benefit amounts.
In correspondence, dated in July 1993, the appellant
indicated that undue financial hardship would result if
waiver was not granted. In addition, the appellant
maintained that consideration was not given to fact that the
reported income, which he contends was the basis for the
waiver denial, was received for only five months of the year.
A financial statement report, dated in October 1993, noted
that the appellant had been on disability retirement since
1989. His spouse was noted to have been employed from
November 1992 to October 1993. Monthly income, derived from
the appellant’s SSI and retirement benefits and the spouse’s
income, totaled $664. Total monthly expenses were reported
as $800. The appellant indicated that his monthly expenses
exceeded his income, and that in order to pay the difference,
he would take small jobs in the summer; his children
reportedly assisted with some expenses.
In a statement, dated in November 1993, the appellant
reported an error in computations in the financial disclosure
submitted in May 1993. In that regard, it was noted that
disposable income was incorrectly reported as $193, but the
correct amount was $129.10.
This matter was remanded by the Board in January 1996 for
further evidentiary development in light of indications in
the claims folder that the appellant’s financial status may
not be accurately shown by the evidence of record. It was
requested that the appellant submit a current financial
status report, noting all current monthly income, expenses,
and net worth. It was noted that to the extent that any
monthly expenses varied, the appellant should list his
expenses on a month to month basis.
The appellant submitted a financial status report in July
1996. The appellant reported that he had been employed from
May to August 1995, and from May 1996 to the present. His
wife was noted to have been employed since March 1994 until
the present. Their monthly income was reported as $1,591.
Monthly expenses were reported in the amount of $1,019. The
appellant reported assets consisting of cash holdings valued
at $150, two automobiles valued at $8,000, and a camper
valued at $250. The appellant also reported real estate
holdings valued at $20,000. He reported outstanding credit
charges totaling $18,445.81, with monthly payments of $439
toward this amount. One account was identified as past due
in the amount of $152. In the remarks space, the appellant
indicated that one of the referenced installment payments was
for the purchase of property. (The Board notes that the
creditor appears to be a relative of the appellant.) With
regard to this debt, the appellant indicated in the
appropriate space “$1,000 due ea[ch] October.” With respect
to this debt, the financial statement discloses the purchase
amount of the property as $3,000, with an unpaid balance of
$1,000. There were no outstanding payments due toward this
debt. The Board notes that the appellant did not provide any
itemized accounting of monthly expenses to demonstrate
changes in income as previously indicated.
In a September 1996 decision, the Committee confirmed and
continued its previous denial of waiver of the overpayment
amount. This determination was based upon the Committee’s
finding that the appellant’s monthly income continued to
exceed his reported monthly expenses and, therefore,
financial hardship had not been shown.
Received in October 1996 was a letter from the appellant’s
spouse. In her letter, she indicated that the financial
disclosure form was inadequate for purposes of listing costs
associated with “maintain[ing] any kind of lifestyle...” In
that context, she noted that the form did not provide
appropriate spaces to list various expenses, to include
religious offerings, recreational costs, clothing, gifts for
children and grandchildren, and home repairs. She further
noted that their home required repairs, but did not indicate
that any of these repairs had been initiated or that
estimates for such repairs/renovations had been obtained, or
that any expenditures had been made by them. It was noted
that a friend had given them a cow; the spouse reported costs
associated with butchering. It was the spouse’s contention
that “expenses cannot be put in a list. Each month has a
different type of necessary places to spend our income.”
(Emphasis in original.)
Analysis
Entitlement to a waiver of recovery of an overpayment of
improved pension benefits is dependent upon whether recovery
of the indebtedness from the appellant would be against
equity and good conscience. 38 U.S.C.A. § 5302; 38 C.F.R.
§§ 1.963(a), 1.965(a). In this regard, the facts and
circumstances in a particular case must be weighed carefully.
Different factors will enter into such decision, such as the
relative fault of the debtor, whether there was any unjust
enrichment, whether there would be undue financial hardship
to recover the overpayment, whether recovery of the
overpayment would defeat the purpose of benefits otherwise
authorized, and whether the debtor relinquished a valuable
right or changed his or her position by reason of having
relied upon an erroneous benefit. 38 C.F.R. § 1.965(a).
In this case, the claim for pension benefits was received
from the appellant in May 1989. On this claim, the appellant
reported that he had no income from any source and no net
worth.
In an award letter dated in September 1989, the RO informed
the appellant that he had been awarded pension benefits,
effective from April 1989, based upon his report that he had
no income from any source. The award letter provided
information which advised him that the amount of pension paid
was dependent upon the amount of his income and that he was
to report any change of income immediately to the VA. That
letter further informed the appellant of the relationship
between pension benefits and family income. He was
specifically advised to notify the VA if there was any change
in family income or net worth and that if he did not notify
the VA of these changes immediately, an overpayment could
result which would be subject to recovery. The notice
stressed that any change in income or net worth was to be
reported and also again emphasized that in reporting income,
he was to report the total amount and source of all income
and that VA would compute any amount which did not count.
Under applicable federal regulations, a veteran, surviving
spouse or child who is receiving pension must notify the VA
of all circumstances which will affect his or her entitlement
to receive, or the rate of, the benefit being paid.
38 C.F.R. § 3.660(a)(1). As a direct result of the
appellant’s failure to promptly and accurately report his
income and net worth, he has been overpaid pension benefits
in the currently calculated amount of $4,902.
The appellant has requested that the VA waive the recovery of
the assessed overpayment of pension benefits at issue. The
law, however, precludes waiver of recovery of an overpayment
or waiver of collection of the any indebtedness where any one
of the following elements is found to exist: (1) fraud, (2)
misrepresentation, or (3) bad faith. 38 U.S.C.A. § 5302(c).
The Committee determined in June 1991 that while there was no
evidence of fraud, misrepresentation or bad faith on the part
of the appellant, the failure to recover the overpayment
would result in unjust enrichment of the appellant. It was
further the Committee’s determination that recovery of the
overpayment would not be against equity and good conscience.
After a thorough review of the evidence of record, and the
contentions presented by the appellant, it is the opinion of
the Board that there is no indication of fraud,
misrepresentation, or bad faith on the part of the appellant
in the creation of the overpayment. This does not mean that
he may not be found at fault in its creation, but merely
indicates that the acts which led to its creation do not meet
the high degree of impropriety as to constitute fraud,
misrepresentation, or bad faith. The appellant’s failure to
accurately report and to timely correct certain information
led to the creation of the overpayment, but such actions do
not automatically preclude the waiver of recovery of the
overpayment that was consequently established by such
failure. Therefore, the waiver is not precluded under the
provision set forth in 38 U.S.C.A. § 5302(a). However, to
dispose of this matter on appeal, the Board must determine
whether the recovery of the overpayment would be against the
principles of equity and good conscience, thus, permitting
waiver under 38 U.S.C.A. § 5302(a) and 38 C.F.R. §§ 1.963(a),
1.965(a).
The regulation provides that the standard of “equity and good
conscience” will be applied when the facts and circumstances
in a particular case indicate the need for reasonableness and
moderation in the exercise of the Government’s rights.
38 C.F.R. § 1.965(a). As noted, the regulations set forth
the various elements to be considered in reaching such a
determination. The first element, pertains to the fault of
the debtor and requires an analysis as to whether the actions
of the appellant contributed to the creation of the debt.
The record shows that the appellant was informed as to his
responsibilities as a VA benefits recipient and that he
failed to accurately report income information and to timely
correct such information when advised that this was the basis
of the award of benefits to him. The award was based upon a
report of no income or net worth. The appellant asserts that
he was unaware of the requirement to report changes in
finances at the earliest practicable date, but instead
believed that he could notify VA of any changes in the
context of his financial disclosure report. Notwithstanding,
the appellant was advised of the basis for the award, as well
as the need to promptly advise the RO of any changes in his
financial status. A review of the record does not indicate
that the letter of award was returned as undeliverable. In
May 1990, nearly one year following initiation of the pension
benefits, the appellant submitted an EVR in which he
reported earned income from SSI and retirement benefits in
the amount of $704, and a net worth of $6,000. As a result
of his failure to timely report this income and net worth,
his pension benefits were amended and later terminated,
giving rise to an overpayment. The Board notes, therefore,
that there is a responsibility on the part of the appellant
to comply with the requirements of the improved pension
program, and that compliance with the obligations by a
pension recipient is a necessary element to successful
management of these financial affairs. In view of his
failure to correctly and promptly report his income and net
worth, the Board finds that the appellant’s actions
significantly contributed to the creation of the overpayment
and he was thus at fault.
As to the element of “undue financial hardship,” the Board
notes that the regulation provides that consideration should
be given to whether collection of the indebtedness would
deprive the debtor of the basic necessities. In this case,
the most recent financial status report, dated in July 1996,
indicates that the appellant’s monthly income exceeds his
monthly expenses in the amount of $572. The appellant
reported minimal cash holdings valued at $100. Additional
reported assets included real property valued at $20,000.
The appellant previously argued that his income fluctuates
and that additional monies earned during the summer months
are utilized for expenses incurred during the winter when his
income is less. On the basis of this assertion, the
appellant was requested to submit a more recent financial
status report to provide an accurate picture of his earned
income. It was suggested, if necessary, that an itemized
listing of income and expenses should be submitted to provide
an accurate depiction of his earnings and expenditures. See,
Stone v. Derwinski, 2 Vet.App. 56 (1992) (claimant’s current
financial status as well as prospective information is
relevant). The appellant provided only the information
provided for on the financial disclosure report, without any
additional statement explaining the disbursement of his
earnings and/or savings during periods when his earned income
was subject to change. In the absence of this information,
the Board must assess the appellant’s ability to repay the
overpayment on the basis of the evidence of record. It is
clear from the financial status report that the appellant is
fully capable of repaying the indebtedness without undue
financial hardship.
The Board has carefully and thoroughly reviewed the other
elements pertaining to equity and good conscience, as set
forth by 38 C.F.R. § 1.965(a), and is not persuaded that the
Government should forego its right to collection of the
indebtedness in this matter. The improved pension program,
by statute, provides maximum income levels under which
eligibility is based and this amount is offset by annual
income of the recipient. Payment of pension is also subject
to net worth limitations. Therefore, since the appellant is
receiving income which exceeds his monthly expenses and has a
net worth, he was in receipt of pension benefits to which he
was not entitled.
Accordingly, recovery of the overpayment would not defeat the
purpose of the objective of the program, and a waiver of the
recovery of the overpayment would, therefore, result in the
appellant’s unjust enrichment. Further, there is no evidence
of record to indicate that the appellant relinquished a
valuable right or incurred a legal obligation as a result of
his reliance on these additional VA benefits. 38 C.F.R.
§ 1.965(a).
The facts of this case do not demonstrate that recovery of
the overpayment would be against the principles of equity and
good conscience. 38 C.F.R. §§ 1.963, 1.965. Thus, the Board
concludes that a waiver of recovery of the overpayment of
improved pension benefits at issue in this appeal is not
warranted. In reaching this decision, the Board finds that
the evidence of record is not so evenly balanced that there
is doubt as to any material issue. 38 U.S.C.A. § 5107.
ORDER
Entitlement to waiver of recovery of an overpayment of
improved pension benefits in the calculated amount of $4,902
is denied.
RICHARD B. FRANK
Member, Board of Veterans' Appeals
The Board of Veterans' Appeals Administrative Procedures
Improvement Act, Pub. L. No. 103-271, § 6, 108 Stat. 740, 741
(1994), permits a proceeding instituted before the Board to
be assigned to an individual member of the Board for a
determination. This proceeding has been assigned to an
individual member of the Board.
NOTICE OF APPELLATE RIGHTS: Under 38 U.S.C.A. § 7266 (West
1991 & Supp. 1996), a decision of the Board of Veterans'
Appeals granting less than the complete benefit, or benefits,
sought on appeal is appealable to the United States Court of
Veterans Appeals within 120 days from the date of mailing of
notice of the decision, provided that a Notice of
Disagreement concerning an issue which was before the Board
was filed with the agency of original jurisdiction on or
after November 18, 1988. Veterans' Judicial Review Act,
Pub. L. No. 100-687, § 402, 102 Stat. 4105, 4122 (1988). The
date which appears on the face of this decision constitutes
the date of mailing and the copy of this decision which you
have received is your notice of the action taken on your
appeal by the Board of Veterans' Appeals.
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